Forum Replies Created
Hi DG Hayes – your policy is a different sort of policy completely. The policy here is fantastic – the same sort of policy as Australians are familiar with, and the only one of its type in the US
You asked whether an individual who is not licenced as a real estate agent / realtor can be "part of the brokers company". By "part of" I assume you mean have ownership interests.
It is unclear what country you are in, so you cannot receive advice about this without that issue being certain. I assume the USA, as you use the words "broker" and "attorney" when you would usually use the words "real estate agent" and "lawyer / solicitor" in Australia.
I then also assume that the broker would set up a company, and that you wish to know whether you can be an equity holder in that company. Generally speaking, you can be a shareholder, but not an officer or director unless you hold a real estate broker licence also. This varies a little State by State, so you will need to check with the relevant US State law as well.
Hi Terry
The lender's recourse in this case is limited to the assets of the borrowing entity. So if borrowing in personal name, then recourse will be to assets of the individual borrower. However if borrowing in an LLC name, limited to the assets of that LLC only.
Hope that clears it up
Up to 90% of appraised value – never purchase price.
No cash reserves or pledging any cash reserves or cross securitisation required
Not crewdit score based – foreigners will nto have a US credit score
I am not sure what you mean by "dangerous loans". Maybe what you mean is that they can be negatively cashflowing if the buyer doesn't understand net rental yields. But that has nothing to do with the loan. The loan is simply a tool.
The lender is a private lender as I stated in initial post.Every State in the USA
Hi JLH
I understand why you would think that. Because, as you rightly point out, most private money lenders don't go any higher than 60 or 70% LVR / LTV.
This one does. PLUS there are no restrictions on property type – buy one yourself, use an advocacy service, or refinance a property you already own.
That is what makes it so unusual.
Good point
Private money lender with rates staring at 9.5% at 65% LTV, and rates increasing as the LVR increases.
When you are looking at properties under $100K, these types of loans fill the gap nicely that is currently unserviced. The difference in repayments on a loan of say $50K, between an interest rate of 6.5% and 9.5% is only $125 per month. And often properties in this price range are cashflowing at 15 – 20% yield in any case, so it still remains positively cashflowed, and the percentage return on invested capital is greater.
Loans are all interest only.
Loan term is typically 3 years, but shorter and loger terms are available upon request. No pre-payment penalty if the loan is repaid prior to the end of the term, so when lending policy loosens again, the borrower can refinance to a more favorable loan without costly exit fees.
There are a few lenders around now that will do 95% with no genuine savings. However not to finance out of a terms contract.
I deal with a number of lenders that will consider at 80% withough genuine savings.
I don' think financing out is an option available to you just yet
Good advice TerryW
Hi jawsjs
Hate to disagree with you, however there are a few options for Australians purchasing in the US. There are not a lot I will agree, but there are some. Much of it is dependent upon the price of the property and the State it is located in.
My understanding of assumable mortgages is that any assumption need to be approved by the lender, and as such the lender needs to see evidence that the new purchaser meets standard qualification criteria. Which means most foreign national borrowers will not. Therefore, I presume you are buying commercial real estate (say multifamily homes of 5 or more), instead of SFH. If you are buying SFH, tell me where and I will check it out, as this takes my interest. I am based in the US so can do this with relative ease.
Zeus
What department of the NAB were you dealing with that offered you the USD loan for the property? Was the rate at US rates? I would have thought it would be. I would love to know
Adam
There are a few ways to finance your US purchase
1. Use equity in your existing Australain property, and set up a line of credit to access it. Draw down this credit, and use this as your purchase monies – whether it be to purchase your US properety with cash, or to use as a deposit
2. Qualify for a mortgage with a US funder. These are in small numbers, but can be available up to 75% LVR for the right property in the right State. Some States there are no loans available at all for foreigners.
Hope this helps
Cheeves Financial – Seasoning is waived until the end of 2011.
Hi Leo
Financing in the US is markedly different than in Australia. The two countries have very little in common.
I have been the owner of a mortgage broking firm in Australia for over 10 years, and also have an office in the US; where I base myself for a lot of the year. I can't comment too much on Loans USA, but it is probably a good idea to speak to past customers that they claim to have helped. In addition, they limit their loans to purchasers of their own property, which seems a bit self-serving to me.
What is possible LVR wise depends on: State the property is located in, purchase price of the property, type of property, visa status, and net worth – to name a few.
If you wanted to purchase a condo in Manhattan for $750K, yes I could probably help you. If you want to purchase a single-family home in Rochester for $45K then maybe not (but possibly if you have a valid US visa).
Every borrowers circumstances are different. But from what I see on here, most buyers are looking at acquiring sub $50K properties, and then only have the capacity to purchase 1 or 2.
Feel free to e-mail me at [email protected] if you want one on one advice.
Hi Detroit Dan
Just appointed a new lender this week that will lend to non-residents up to 75% LTV (but more likely 65% for most) in any State at most price ranges.
Pretty exciting – standby for more information to come in a new thread
I have been hearing self-appointed experts say for a couple of years now that there is a housing bubble, and that property values are going to fall from the sky. We are all doomed, and everybody should sell their property now, or risk facing massive losses.
If you say something for long enough, eventually, that fact will become true. However over a period of a year or more, then these “experts” should admit they got it wrong, and the media should pay scant attention to them.
Of course that won’t happen. Headlines like “Housing prices to remains stable” won’t sell newspapers now will they?
The fact is that housing prices (let’s take Melbourne for example), will not drop appreciably. And there is a simple, basic reason underwriting that. Supply and demand.
So maybe let’s see who controls supply, and who controls demand.
Supply variables are:
(a) Physical barriers such as water, cliffs, freeways, etc (which we can do little about)
(b) Labor and materials cost (which are set by the market)
(c) Financiers – by way of access to funding for developers and builders
(d) By for the biggest controller of supply are zoning and planning restrictions. Daylight second.
These of course are controlled through the local councils (through zoning ordinances) and the State Government, through their Melbourne 2020 vision and their masterplan.
The adage “they are not making any more land” is irrelevant. Smaller lot sizes creates more lots, and higher densities creates more living accommodation, albeit airspace. And the sole controller of this is local and State governments.
And then of course, don’t forget that the Victorian government (via VicUrban) are by far the largest holder of residential land around Melbourne.
So they almost completely control the supply or vacant land, and by extension control land prices through controlled land releases. They are understandably, increasing lot prices with each stage to maximise their asset sales.
The State government also encourage interstate and international migration, thereby increasing demand for housing in a market where rental vacancies are still quite low. So they are the largest controller of demand as well.
I can’t see VicUrban decreasing land prices. Nor can I see the State government discouraging new investment or migration to the State. So there will be no change to this balance.
We are not in an asset bubble. There will be no bursting, as there is no bubble to burst. Unless the State Government goes bankrupt and has to liquidate its assets, at best there will be a stagnation of pricing.
If you still don’t believe me, consider what will happen if prices drop:
* If prices do drop by the 20% or more that doomsdayers are saying, people who are renting now will see that owning is now suddenly so affordable compared to the price of rent, that demand will spike and prices will rise again.
* If prices do drop by 20%, then the first home buyer in the suburbs who has just purchased their first house and land package for $400K (which cost $220K to purchase the land and $180K to build), will now own a property that is worth $320K. The land is still worth the same amount – the State government (nor privately owned developers for that matter), are not going to drop land prices.
The impact of this is that builders will need to build new houses now for $100K which was formerly being built for $180K. Let’s say the average builder margin is 18%, the raw cost of materials and labor alone is about $152K. Builders will be out of business in a hurry, as they would be losing $52K on the contract for the above example. The result – no new housing built.
So when we see an ever increasing population, in a market where rental vacancies are already low, and no new stock being built, what will happen to demand? It will increase rapidly, and again support housing value.
The only other single controller of property prices are banks. They can control a false market by creating demand from buyers by way of how easy it is to obtain credit, and how cheap it is. Which is exactly what happened in the US.
Getting credit in Australia is not easy for a buyer. It really never has been. It is hard. And it is certainly not cheap. The brakes have been applied in full for nearly 3 years. So there has been no false market lifting property prices over this period. Yet, prices still increased. And strongly. Which suggests that the banks carry little weight in determining current housing prices.
Over the past 6 months, it has loosening slightly which should further increase demand slightly.
Forget about statistics. Statistics are just numbers. They explain nothing. Anyone that claims that prices must decrease just because the numbers are unsustainable is not thinking.
It is ridiculous to compare the “affordability” of housing (an inappropriately named measure in and of itself in its current format) from one country to another. Not all countries have the same lending policy, the same interest rates, the same deposit requirements, the same loan term, the same control measures, the same population changes in percentage terms, or the same taxation (impacting on after tax income which can be contributed towards debt servicing; as well as attracting investors or not).
As a buyer, what would you rather buy?
A house for $300K with 20% deposit and 20% interest rate?
or
A house for $500K with 0% deposit and 0% interest rate?
The former naturally. Because the actual property price is not how much you pay to purchase the property – the actual price is how much is costs to get into the property (the deposit) and how much it costs you on a regular basis (your mortgage payments).
And when mortgage payments are comparable to rent, people will be attracted to ownership almost every time.
Crusty – JB Global run this index option, and after having a look at it about 6 months ago, it appears quite low risk. Capital protection at 100%, with worst downside being loss of interest. But if yield is not high enough to cover intrest, what is the point? You cannot control yield, yet direct investment you can at least have control soewhat over rent received.
Thanks for the feedback CheevesFinancial.
With what Nigel does…. Nobody wants a mortgage. They want what a mortgage can give them. That is, they want to purchase a property, usually with as little money as possible. So an assumable mortgage is a solution, although they are quite rare now as not many lenders allow it . A purchase money mortgage (vendor terms) is another solution, and buying a property subject to the mortgage (or deed of trust depending on which State you are in) is a third.
Two things I will say about these options however:
1. They usually result in a higher purchase price for the seller, as there has to be some incentive to consider this option over a straight sale
2. You can forget about acquiring properties that are in foeclosure or bank owned under these options as well.
So there is no magic solution that I can see.
Hi all
See my post on this website a month ago – it is quite extensive and will give you some insight into how financing in the USA works for foreign nationals
https://www.propertyinvesting.com/forums/property-investing/overseas-deals/4335151
